I read with amusement Jack Kain's rationale for keeping the dealer reserve ("Dealer reserve lives - and rightly so," Feb. 28).
His statement that lenders are selling a wholesale rate to dealers is patently false. Major indirect lending banks purposely offer a higher loan rate to walk-in customers as a way to discourage walk-in loans. Contrary to Kain's contention, many lenders can and do stay in business offering attractive auto loan rates.
Retail credit offices in dealerships are there to sell products to dealership customers, period.
If the dealer reserve was such a good deal for their customers, dealers would state the buy rate, the dealer markup and the dealer profit openly on their retail installment contracts. That would be the true transparency that the National Automobile Dealers Association supposedly desires.
The existing dealer reserve structure is flawed. Consumers pay more than they should, and dealers have come to rely on that to pay for their operations.
Whether through legislation or continued pressure from consumer groups, a day will come when dealers are compensated for indirect loans through a flat-fee percentage system that is fair and open to consumers. Kain and his dealers can choose to fight that, but they will be fighting a losing battle.